Amber Group, a Hong Kong-based cryptocurrency lending firm, is reportedly considering the sale of its Japanese unit to focus on expanding operations elsewhere, according to a Bloomberg report.
The potential sale comes as Amber Group, like other cryptocurrency-focused firms, faces an uncertain regulatory environment in Japan, which has cracked down on unregistered firms in recent years. The country was once a hub for crypto trading and investment, but has become increasingly cautious following a number of high-profile hacks and the collapse of Mt. Gox, once the world’s largest Bitcoin exchange.
Amber Group’s Japanese unit, which it acquired in 2018, is licensed by the country’s financial regulator and operates as a crypto exchange. According to unnamed sources cited by Bloomberg, the unit has been seeing declining trading volume and struggled to differentiate itself from other exchanges in the crowded market.
Amber Group itself has been expanding rapidly, raising $100 million in a recent funding round that valued the company at $1 billion. The firm, which was founded in 2017 and has offices in Hong Kong, Taipei, and Seoul, offers institutional-grade liquidity and risk management services to clients in Asia and beyond. It has said it plans to use the funds to grow its team and expand globally.
The potential sale of the Japanese unit, which represents a small portion of Amber Group’s overall business, is said to be part of the firm’s broader strategy to focus on core markets and services. The company has not commented on the Bloomberg report.
Amidst the broader boom in the cryptocurrency market, crypto lending has emerged as a lucrative niche for firms like Amber Group. The practice essentially involves borrowing and lending digital currencies, with borrowers using their holdings as collateral to secure loans. Lenders earn interest on the loans, while borrowers gain access to liquidity without having to sell their holdings.
The market for crypto lending has grown rapidly in recent years, with a number of firms vying for market share. Some, like BlockFi and Celsius, have attracted substantial venture capital funding and achieved billion-dollar valuations. Others, like Nexo and YouHodler, have sought to differentiate themselves with innovative features like instant loans and card-based transactions.
Against this backdrop, Amber Group has positioned itself as a leading player in the Asian market, where demand for crypto lending and trading services is high. In addition to offering institutional-grade services, the company has emphasized its robust risk management and compliance practices, which it says are designed to protect clients and ensure regulatory compliance.
The potential sale of its Japanese unit, while a relatively minor development, underscores the challenges facing firms operating in the cryptocurrency space. Uncertainty around regulation, both in Japan and other markets, and a crowded competitive landscape mean that even well-funded players like Amber Group must be nimble and strategic in order to thrive.
Looking ahead, the company’s focus on core markets and services, and its commitment to risk management and compliance, will likely be key to its success. Whether it ultimately decides to sell its Japanese unit or not, it will need to remain vigilant and adaptable in a rapidly-evolving industry.
